No-deal Brexit would hit UK economy, says IMF

The International Monetary Fund has warned that a "no-deal" Brexit on World Trade Organization terms would entail "substantial costs" for the UK economy.

The IMF said that all likely Brexit scenarios would "entail costs", but a disorderly departure could lead to "a significantly worse outcome".

The challenges in getting a deal done remained "daunting", it said.

The IMF expects Britain's economy to grow by 1.5% in both 2018 and 2019 if a broad Brexit agreement is struck.

The predictions came in the IMF's latest annual assessment of the UK economy.

Christine Lagarde, the IMF's managing director, told a news conference at the Treasury in London: "Those projections assume a timely deal with the EU on a broad free trade agreement and a relatively orderly Brexit process after that.

"Any deal will not be as good as the smooth process under which goods, services, people and capital move around between the EU and the UK without impediments and obstacles."

The Chancellor, Philip Hammond, said the government must listen to the IMF's "clear warnings".

He added: "The IMF are clear today that no deal would be extremely costly for the UK as it would also for the EU, and that despite the contingency actions we're taking, leaving without a deal would put at risk the substantial progress the British people have made over the past 10 years in repairing our economy."

The IMF warning comes as Theresa May told the BBC that MPs must choose between her proposed deal with the EU - or no deal at all.

Speaking to Panorama, the prime minister said that if Parliament does not ratify her Chequers plan, "I think that the alternative to that will be having no deal".

Mrs May said there needed to be "friction-free movement of goods" with no customs or regulatory checks between the UK and EU on the island of Ireland to avoid a hard border there.

A plan by Brexiteers to resolve the Irish border issue also came in for criticism from the prime minister, who said it would create a "hard border 20km inside Ireland".